With No Risk of Voter Backlash, Emanuel Makes a Sensible Call for a State Gas Tax Hike

One good thing about being a politician who’s not running for reelection is that you can call for sensible, but unpopular, policies without fear of a backlash at the polls. The Chicago Tribune’s Bill Ruthart reported today that Mayor Rahm Emanuel is calling for a 20 to 30 cent hike in the Illinois gas tax to fund a state transportation bill. Emanuel announced in September that he’d be stepping down this year, although I wouldn’t call him a lame duck since recent events at City Hall suggest he’s still got plenty of political pull.

Illinois’ gas tax has been stuck at 19 cents a gallon since 1990, which means that there has been less and less money each year for properly funding transit and fixing roads and bridges as the buying power of the tax revenue has decreased with inflation. Many Illinois politicians have acknowledged for years the state gas tax needs to be increased because our public transportation is sorely underfunded and our infrastructure is crumbling. But there hasn’t been much action on the issue in our state because U.S. drivers are accustomed to cheap gasoline, and raising the price of gasoline is often considered to be political suicide. (The federal gas tax has also been stuck at 18.4 cents a gallon since 1993.) Meanwhile, Illinois hasn’t passed a major infrastructure bill in almost a decade.

Emanuel announced his idea at a press conference today at City Hall, where representatives of the Metropolitan Mayor’s Caucus joined him, the Tribune reported. “Our state can’t wait any longer,” Emanuel said, adding that other Midwestern states have passed gas taxes to fund transportation bills.

The Tribune noted that governor-elect J.B. Pritzker has expressed interest in passing a state infrastructure bill but hasn’t discussed how he plans to fund it, so Emanuel’s announcement could help raise support for paying for the bill via gas tax revenue. The mayor told the paper in October, shortly after he announced he wasn’t seeking reelection, that he was in favor of raising the state gas tax. “If you want a transportation system that efficiently gets you from your work to home to be with your family and vice versa, we have to invest in the future and we have to have resources,” he said at the time. He also voiced support for implementing a vehicle-miles-traveled tax, so that revenue for transportation won’t plummet as more drivers switch to electric and hybrid vehicles.

It’s great that Emanuel currently feels free to speak his mind about raising the gas tax, because doing so would have multiple benefits for Illinoisans. Each year that Illinois hasn’t raised the gas tax has essentially made driving cheaper, encouraging more vehicle trips. Making driving somewhat more expensive would discourage unnecessary trips, which would lower the number of traffic crashes and reduce air pollution and traffic congestion. Meanwhile, adequately funding the CTA, Pace, and Metra so that service is more frequent and more reliable would make transit a more attractive option, which would boosting ridership and fare box revenue, creating a virtuous cycle.

Of course, any time you raise the tax on something that’s considered indispensible, the price hike disproportionate impacts lower-income people. To mitigate the regressive effects of the raising the gas tax, the Illinois Legislature should consider creating other tax rebates or incentives to soften the blow for folks below a certain income level.

But raising the state gas tax to fund transit and infrastructure is the responsible thing to do, and it’s about time that one of Illinois’ top leaders spoke out on the subject.

“To mitigate the regressive effects of the raising the gas tax, the Illinois Legislature should consider passing a proportionate income tax break for people in the lower brackets, or taking other steps to soften the blow.”

Illinois has a flat income tax of 4.95%. There are no brackets.

Matt

Unfortunately this remark is pretty consistent with where Streetsblog has gone over the past few years with Steve’s departure. Knee jerk writing that most of what’s wrong with the city is a lack of compassion for communities lower down the distribution. Please focus on transportation as it affects all
Chicagoans and leave divisive political statements out of things, particularly when background research has clearly not been done.

But that highlights the fact that Illinois’ flat tax is inequitable — working-class folks shouldn’t pay the same tax rate as J.B. Pritzker. The governor-elected has said as much and claims he’s wants to implement a graduated state income tax.

johnaustingreenfield

Steven Vance hasn’t gone anywhere — he’s still on the payroll at Streetsblog Chicago, helping out behind the scenes with technical matters and serving as a sounding board for ideas, and he still writes for us occasionally. (And, for the record, his politics are probably a bit further to the left than mine.) Again, I apologize for the brain-slip about Illinois income tax policy, but if you go over Streetsblog Chicago’s past articles I think you’ll find that we have a good track record for getting our facts straight.

Kevin M

While I understand the benefit of a VMT tax over a gas tax, I no longer believe there has to be one or the other. The tax should follow the technology: A stiffer gas tax should be applied to all traditional combustion-engine motor vehicle owners (to shift this climate-dirty transportation behavior towards electric consumption alternatives) and, *at the same time*, a VMT tax should be applied to all hybrid and electric vehicles. And, yes, the financial impact needs to be off-set somehow for low-income taxpayers.

Both a higher gas tax and a VMT tax should co-exist to reap multiple benefits: The gas tax does more to impact climate change (by reducing carbon in our transportation sector) and the VMT tax makes this whole package more equitable while ensuring an overall reliable (future-proof for changing fuel/technology) source of tax revenue for transportation investments by the public.

Fred

Illinois’ flat income tax is in its constitution. Pritzker can’t implement tax brackets without some non-insignificant help.

Jeremy

Here is how Illinois can decrease taxes for lower income earners despite having a flat tax:

Increase the amount for exemptions on line 10 of the 1040. Increasing those amounts would decrease taxable income. For lower income earners, a higher percentage of their income will be tax free.

Courtney

Il’d ove to see a higher rate for VMT for folks who drive SUVs.

Rail Provocateur

Just as electric and battery-operated autos and trucks are in sight of seriously entering the scene, merely proposing an increase in the long ignored gas tax will not even begin to cut into the problem. Regrettably, today’s politicos have narrow, short-term vision that does little to solve the overall transportation issues.

What is required includes:

1) VMT to cover the increased electric and battery vehicles that otherwise will evade the gas tax.

4) Refuse any governmental investment to accommodate A/V until correcting current infrastructure deficit.

5) Require all curbside bus firms to use the available bus depot, or, pay municipalities for the extra cost for police and street cleaning; but no more free-loading of such private firms.

6) Invest in METRA as a true regional line, as the RER in France. This would include infrastructure and equipment to extend service to DeKalb, Rockford, and Milwaukee (via UP along North Shore, Waukegan, Kenosha, and Racine).

7) A propitious moment to evaluate the value of current Amtrak Midwest Corridor services in relationship to their costs:

a) Under the Passenger Rail Investment & Infrastructure Act of 2008 (PRIIA), Amtrak prepared and secured this legislation from Congress that ordained the continuation of no costs to the states along the Northeast Corridor (NEC) for trains scheduled every 30 minutes; however, subjected all other states (e.g., Illinois) to pay full cost per Amtrak’s own cost allocation methodology, which does not follow GAAP. State and local politicos should require their members of Congress and Senate to revamp PRIIA in 2019 to 1) prevent state payments from being converted by Amtrak to subsidize the NEC; 2) that all such payments are re-invested in that specific state; 3) stop the “Animal Farm” analogy and either require all states, or none, to pay their share of their corridor trains.

b) Require overhaul of Amtrak’s full cost methodology which excessively dumps unrelated NEC infrastructure and corporate costs into the state-supported corridor payment formula. Such a SWAG approach to cost allocation held in disrepute by financial professionals serves to only discourage states from fulfilling the purpose of their intercity/inter-regional trains by increasing frequencies and/or expanding routes. The key is to facilitate “day-trippers” with schedule convenience and frequency.

c) Given Amtrak’s overt bias towards the NEC, perhaps the best answer is for Illinois, and the other Midwest states, to assert their right to contract their corridor services to a vetted, experienced private operator. How long will we have to wait for Virgin Trains USA to either compete head-on with Amtrak, or, to simply replace Amtrak?

8) In lieu of Amtrak, between an expanding regional service by METRA and the private operation of intercity/inter-regional services, passenger rail will be in an improved position to provide a wider service, on greater frequencies, and at a lower cost. For example, just imagine the cost to a state for the inclusion of the Amtrak cafe car (despite being fully depreciated); the employee cost of an LSA at $48/hour; plus, the cost to the state for lost revenues due to the unacceptable menu and lack of bartender skills, equipment, and supplies.

As we look at the big picture for solving transportation needs, what need not come into play is the chatter promoting hyperloop or high speed rail. For now, given the thrust of infrastructure improvements from the feds onto the states, funding will continue to be limited. Funding resources demand we follow an incremental approach. Therefore, such funds must be focused on resolving the above issues, eventually to allow for higher speed passenger rail.

R.A. Stewart

In principle I like this, but in the context of Illinois politics there would be risks and challenges.

First, of course, and as John acknowledges, it will work out in practice to be yet another regressive tax. It will hit hardest those who can’t afford to buy a Prius or Tesla and who don’t have an alternative to driving to get to work; and that last category basically includes everyone who doesn’t either live and work in lakefront or near-downtown neighborhoods or commute downtown from the suburbs. Can tax rebates or incentives mitigate this impact? Probably to some degree, but one problem with such incentives, especially for really poor people, is that they operate months in the future–when you’re doing your taxes next year–and the financial pain and budgetary pinch happen right now.

Also, I come originally from downstate and am still in touch with people there, and I can tell you with complete confidence that an increase in the gas tax will make the Democratic Party and Chicago even more hated outside the metro area than they (we) already are. Not saying that it shouldn’t be done, but those will be consequences.

The other concern I have is with where the funds will actually go. Supposedly to transit and infrastructure, yes. But this is Illinois, this is Cook County, this is Chicago. Remember how proceeds from the lottery were supposed to go to education? Remember how TIFs were supposed to stimulate development in poor neighborhoods where investment is lacking? I can easily see the gas-tax money going the same way:

–Much of it simply vanishing into the abyss of the general fund.

–Some of it going into road construction, done the Illinois way (politically-connected firms get fat contracts; projects take twice as long and cost twice as much as they do anywhere else; the resulting repairs last, if we’re really lucky, one winter before the road is in worse shape than it was to begin with).

–Not a penny for transit.

Sorry to sound so negative. We absolutely need to invest more in infrastructure, with special attention to transit, which has been starved for decades under both Republican and Democratic governance. But, again, I’ve lived in Illinois all my life, and when I think of how this tax would in fact be implemented, what I imagine is how it would be implemented in the usual Illinois way.

A new report by the Metropolitan Planning Council finds that Illinois needs to invest $43 billion over the next decade to get its roads, bridges, and transit lines in a state of good repair. This is a daunting number, especially for a state that has gone over nine months without a budget plan. However, the […]